"What the Chancellor should have done on Monday was take radical action on monetary policy to get credit flowing again.
That is what we have been arguing for weeks and that is what Mervyn King yesterday to the Select Committee.
He said: 'I am in no doubt that the single most pressing challenge to domestic economic policy is to get the banking system to get lending in any normal sense. That is more important than anything else at present.'
The CBI says: 'Getting the credit markets working properly is much more important than the fiscal boost.'
Now, the Chancellor told us that the purpose of the bank recapitalisation was to restart lending to the real economy.
On that test, even he must agree that the bank recapitalisation has failed.
It may have rescued the banks and the bankers, but it has not rescued the economy.
The country has lost count of the number of times we've been told that the Government was summoning the banks to a crisis summit, or ordering them to lend to small businesses, or forcing them to pass on rate cuts.
Well it may have secured newspaper headlines, but it hasn't helped businesses get the credit they need and now is the time for more direct action.
The Government should establish a new state institution that will directly underwrite lending from the banks to British businesses.
It should do so for a commercial insurance fee, passed on by the banks, that would fully protect the taxpayer.
Businesses want credit and credit insurance and they are prepared to pay a fair price for it. The problem at the moment is they can't get any credit or any insurance.
This would not actually increase government borrowing. Instead it would be like the secured guarantees for a fee that the Bank of England has already put in place for inter-bank lending, which we supported. It is supported by all the major business organisations.
This is the kind of radical policy action which we urge and which the Government now needs to undertake.
Not fiddling around with temporary VAT changes but getting to the heart of the credit crunch and solving Britain's credit problems.
That is what would really help get the British economy back on track and stop the terrible rise in unemployment now taking place again under a Labour government."